Discussion

MGT 41935193

Discussion Board One

Before reading the article, concern that in negotiations, many people focus only on the price of the product or service, or the amount of money in a salary. Seldom to they consider other aspects. For example, I knew a man (John) that was offered a job for $120K a year. Based on market and job surveys, the $120K a year was right on market value. He was very excited about the job but knew by accepting this job, he would pay an additional $3,500-$4,500 more a year in family benefits than he did at his presence employer.

He countered the employer’s offer with $135,000 a year. The additional $15K a year would be enough to take care of the family benefits for about four year. By then, he thought his salary would have continued to increase with inflation, cost of living, merit raises, etc. that he could keep the same standard of living.

After going back and forth with the employer, the employer said the best the company could do was $125K. John was very down and the counteroffer from his employer and told the company he would have to pass on the job. The company was just as upset because they wanted John’s services because he would be a great asset to the team.

In a last-ditch effect, the company ask John why he was adamant about the $135K a year. In response, John quietly said because your benefits are much higher than my previous employer’s benefits and the additional amount would put me where we want to be.

Enthusiastically, the employer said, you are kidding me…this additional amount is for the benefits? John replied, yes. The employer said, no problem, we will take care of the additional amount for your family benefits if you come to work for the $125K a year? John was excited and accepted the deal!!!

In essence, John came out about $10K a year better than if he had received the $135K a year when consider the overall picture of additional taxes, etc.

The point is the price is just one part of the picture. Yes, it is an important part, but always consider why you are wanting what you are wanting and are there other ways to get there.

To avoid the multitude of advertisements, I copied and pasted the following article from a website. If you want to see the original website, here it is: https://www.brickunderground.com/blog/2015/07/how_to_negotiate_that_rent_increase_come_lease_renewal_time

8 ways to negotiate your rent when renewing your lease. (Emily Myers, August 2022).

Landlords are trying to increase rents for current tenants to match what they can get on the market now that demand for apartments is booming.

If your lease is up for renewal, your landlord has likely notified you that your rent is going up— by as much as 30 to 60 percent in some cases. The New York City rental market is very competitive, and landlords are trying to increase rents for current tenants to match what they could get on the market from new renters.

You may not be experienced at negotiating but the main tactics to negotiate your rent at lease renewal are not hard to deploy: Keep it polite and point out that you've been a good tenant and paid your rent on time. These are among the important considerations to help you get the best deal on your lease renewal.

It’s important to understand that it’s a different market now compared to a year or so ago when you signed your lease. At that point there were many vacancies and renters had the upper hand. If your original lease included a concession, you are unlikely to get a similar deal again. This is especially the case in a corporate-managed, amenity-rich rental building where renewal offers are often non-negotiable. 

The trick is not to respond emotionally to a big rent increase and weigh whether staying is cheaper than moving out. Keep in mind that renewing your lease means you’ll avoid the costly hassle of moving to a new apartment, paying movers, a security deposit, and a broker fee. 

Scotty Elyanow, a broker at Compass, points out “there are very few no-fee rentals these days.” It also makes sense to renew if you know you’ll be in NYC for another year or so and you truly love your place. 

If you can’t afford to renew the lease and commit to the full term, but you keep paying some form of the rent—the old rent or a more modest increase—and the landlord accepts your payments, you become a month-to-month tenant. This can give you some flexibility but there are also risks. You no longer have the protection of a lease and if a landlord wants you out, particularly if you’re not paying the rent they asked for, you face eviction.

Here’s what to know if you are negotiating your lease renewal.

1. Understand how market-rate units work 

Market-rate tenants are subject to the forces of supply and demand. That means when it's time to renew your lease, landlords are free to raise rents as much as they want—they are only constrained by what renters are willing to pay. 

This is in contrast to rent-stabilized apartments, where landlords are only allowed to raise the rent by increments approved by the Rent Guidelines Board. For example, rent increases for a one-year lease starting on or after October 1st 2021 and before September 30th 2022 are frozen for the first six months but can increase by 1.5 percent for the remaining six months. Two-year leases can be increased by 2.5 percent.

With a market-rate apartment, if there are lots of people looking for a place to rent, as there are now, landlords are more inclined to raise the rent. In slower times they may be more inclined to offer renewals with small or no rent increases, or even offer an incentive to renew. That was what happened when the pandemic was at its worst in New York City.

Generally, landlords try to retain good tenants. “Some landlords do not want to deal with a lost month of vacancy plus deal with any painting, cleaning and repairs which can become costly,” Elyanow says.

Owners may consider a reasonable offer from a good tenant, but they also know they may be able to rent an apartment out at a higher price to an incoming tenant

2. Point out your track record 

Landlords generally want to keep a tenant in an apartment, because finding new renters can be costly, especially if renovations or updates are needed before the place can be put back on the market. If you've been a good tenant who always pays your rent on time, make the case to your landlord who may be less inclined to raise your rent to the point that it pushes you out. 

Elyanow suggests writing a nice letter to your managing agent or landlord and explaining how great a tenant you are, and how you pay your rent on time. You might even appeal to their "better angels," he says, explaining how difficult the pandemic has been for everyone and how you love your apartment and building and wish to stay for a long time. 

3. Stay calm, and ask politely 

Be respectful in approaching your lease renewal and negotiating against an increase or for a reduction. And don’t wait until the last minute.

Tenant attorney (and Brick Underground sponsor) Sam Himmelstein, a partner at Himmelstein McConnell Gribben & Joseph, advises tenants to say, “I’d like to renew at the same rent,” and see how the landlord responds. 

Some landlords may not want to negotiate but many will, Elyanow says. “Keep trying to negotiate with the landlord and know when it is your deadline to respond to any final renewal,” he says.

4. Do your research

If you’re presented with a rent increase, it pays to check what similar-sized apartments are renting for in the neighborhood on real estate listing and brokerage sites. If you are arguing against paying more, it’s better to make a case for yourself by presenting some numbers. 

Catharine Grad, a tenant attorney at Himmelstein McConnell Gribben & Joseph, says telling your landlord that you’ve lost your job isn’t your best strategy. Think about how you can make the best case for yourself. “Tenants need to figure out what they have to give,” she says. That might simply be that you can continue to pay at the same rate. 

During the pandemic a Brooklyn renter made a case for lowering his rent at renewal time by creating a spreadsheet that showed how rents for similar apartments had dropped 8 to 10 percent. He asked for a 12 percent discount, and received a counteroffer of 10 percent. He stayed. 

"I accepted because I thought it was reasonable, and it amounts to five or six weeks free based on my previous rent," the renter says. 

While current market conditions would make this type of negotiation extremely unlikely now, through doing the research you may find the increase you’re being offered is in line with similar apartments in your neighborhood. In this way, an increase might be easier to stomach.

5. Get intel from your neighbors 

Gramercy renter Jennifer C. found out that her neighbors in a similar-sized apartment were offered an incentive for starting renewal negotiations early. 

"We were not offered that same deal, so I leveraged it," she says. The end result? She negotiated her rent increase down nearly 50 percent. 

This can also occasionally work for rent-stabilized apartments. One agent we spoke to says he once saw a similar apartment in his building going for hundreds of dollars less than his rent-stabilized place. He told the landlord he would apply for the other apartment in order to save money.

"It went back and forth, and eventually they conceded and gave me the same [lower] rate," he says. 

6. Small landlords might be more willing to negotiate

Some landlords and management companies, especially those in larger buildings or complexes, use software that sets rental rates according to real-time market conditions, seasonal trends, competitor prices, and lots of other metrics. 

But analytics programs can be expensive for landlords of smaller buildings. Mom-and-pop landlords are also hurt more by a vacancy than a larger rental building so for smaller landlords, decisions may rely more on a gut check. This is especially so if you are renting an apartment in a house: Are you a respectful, quiet tenant who pays the rent on time? If so, they may be more willing to give you a break when your lease is up.

7. Make the case for an upgrade 

In a slow market, if your rent is going up, you might be able to ask the landlord to make a significant replacement or repair. One agent worked with a landlord who didn't raise the rent one year but wanted to increase it by $150 per month the next. He negotiated it down to $100 and got a bathroom renovation out of it.

"We were willing to pay more to have something a little nicer," he says.

If you have been asking for repairs to your apartment, it doesn’t hurt to mention that when it’s time to renew the lease. 

Bringing up a laundry list of necessary improvements could make for a tense lease-renewal conversation but it’s not a bad time to remind management about any on-going issues, like for example, the elevator renovation that took 12 weeks instead of the scheduled four. 

8. If the rent is rising, ask for a two-year lease

Asking for a longer lease can lock in the rate and means you avoid going through negotiations again 12 months later. This might be something to consider if you like your apartment and are committed to staying in your neighborhood. Not all landlords will be open to giving you a two-year lease, but there’s no harm in asking.